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India's neighbours struggle after shock currency move

27 November 2016 01:42 pm - 2     - {{hitsCtrl.values.hits}}


India's surprise move to get scrap 500 and 1,000 rupee notes to target hidden stashes of "black money" has affected the country's immediate neighbours, which all have long-standing trade, tourism and family links.

Sri Lankans living in India says they are facing serious difficulties as a result of the sudden decision by the Indian government.

A PhD student who declined to give her name said the announcement came while she was visiting Sri Lanka on holiday.

"When I came to Sri Lanka, I brought some Indian rupees with me. As I have an Indian visa for valid for 4 years, I was not shocked as I thought I would be able to go to State Bank of India in Colombo with my 500 rupee notes," she said.

"But they were quite rude and told me only dollar notes could be exchanged outside India. They also refused to offer me any advice."

Sri Lankan diplomats have also told BBC Sinhala that the cash crisis has left hundreds of Buddhist pilgrims stranded in India. Without access to cash, they are finding it difficult to continue their journeys or return home, the diplomat said.

Poor families normally take part in these pilgrimages, sometimes even pawning their jewellery or other valuables to make the trip.

More than one million Bangladeshis visit India every year for medical, tourism and business purposes.

Many Bangladeshis, especially businessmen, visit as often as two or three times a month. Being businessmen, they tend to carry wads of high-value Indian notes on their trips.

Since the new rules have come into effect, Bangladeshis have been trying to exchange their unusable currency, but money-changers have refused to take them.

There is a lot of informal trade in goods between Bangladeshi and Indian businesspeople, and they exchange money at the border without bothering with documentation.

Farmers in eastern Nepal say the volume of their agricultural exports to India have decreased by almost 90% since the Indian currency move.

The unsold products are being dumped in warehouses and even along main roads.

About 98% of cardamom and more than 70% of tea and ginger produced in Nepal are bought by Indian businessmen from across the border.

In Pakistan, currency dealers are estimated to hold more than 150 million rupees ($2.2m) worth of Indian currency. After the government's move on the 500 and 1,000 rupee notes, this stash is being traded for about a quarter of its value, they say.

The general secretary of the Pakistan Exchange Companies Association says Pakistani citizens hold Indian currency - sometimes in large amounts - because they travel there for family reasons.

"Not enough time was given to people outside India to exchange money," Zafar Paracha said. "It was very sudden."

Pakistan has also denied that counterfeit Indian currency is being produced in Karachi and Peshawar. Targeting counterfeit cash is thought to be another reason for India's unexpected move.(BBC)

  Comments - 2

  • Himanshu Sunday, 27 November 2016 02:20 PM

    Anyone who has bank account in india can deposit their old 500 n 1000 currency note till 31st december 2016 directly to their account and latter they can withdraw after 31st December they can exchange their money at RBI regional office via DM Android App

    Javed Monday, 28 November 2016 01:19 PM

    India High Commission should step forward to prevent loss to Sri Lankan as a result of demonitisation. There should be an arrangement to change old Indian notes in Sri Lanka.

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